Investment Banking Interview

what does COGS represent on the income statement

represents the expenses that are linked directly to the sale of the product or service

what does Operating expenses represent on the income statement

represents the expenses that are not directly linked to product sales, which could include employee salaries, rent, and DEPRECIATION AND AMORTIZATION

where does Other Income and Expenses go on the income statement and what does it also include

goes between pre tax income and operating expenses on the income statement. includes Interest.

what does Net Income represent on the income statement and what is the equation for net income

Net Income represents the company’s “bottom line” and profits after tax. Net income = Revenue - Expenses - Taxes

What are a few points on IS revenue, expenses and taxes

1. They do not need to be related to a companys operational activites

2. they do not need to be cash expenses

3. Sometimes items may be embedded in other items ( Depreciation being included in COGS)

What items ALWAYS appear on the Income Statement

Revenue, COGS, Operating Expenses, Depreciation, Amortization, Stock-Based Compensation, Interest, Gains/ (Losses), Write-downs, Other Income / Expenses

What Items NEVER appear on the Income Statement

Capital Expenditures, Purchasing or Selling Investments and PP&E (Plants, Property, and Equipment), Dividends, Issuing or Repaying Debt Principal, Issuing or Repaying Shares, Changes to Balance Sheet Items like Cash, Debt, Accounts Recievable, and Accounts Payable

What criteria do the items that ALWAYS appear on the IS follow

1. They affect the company’s taxes AND They correspond to the year listed on the IS

what criteria do the items that NEVER appear on the IS follow

1. They do not affect the company’s taxes, OR they do not correspond with the year listed on the IS (i.e, Capital Expenditures refers to purchasing Assets that often last for 10-20 or more years)

What does the Balance sheet show?

shows the company’s resources, its assets, and how the business acquired those resources - its liabilities and Equity - at a specific point in time

What is the equation for Equity AND What must balance sheets always remain in

Balance sheets must always remain in balance and Assets + Liabilities = Equity

What is an asset and a Liability

An asset is an item that will result in additional cash in the future (indirectly or directly)

A Liability is an item that will result in less cash in the future (indirectly or directly)

What are the most common liabilities related to?

Related to external parties, such as payments owed to suppliers (i.e, accounts payable) or borrowed money. Liabilities are used to fund a business

What are Equity line items

similar to liabilities, but they refer to the company’s own internal operations rather than external parties.

What are current and Long-term assets/liabilities

Current assets are any assets that last under a year

Long term assets are any assets that last over a year

What are the key assets

Cash, short-term investments, long-term investments, accounts receivable, prepaid expenses, inventory, PP&E, other intangible assets (patents, trademarks), and Goodwill (the premium a company pays to acquire another one on top of the shareholders’ equity).

what are the key liabilities

Revolver, accounts payable, accrued expenses, deferred revenue, deferred tax liability, long-term debt

What is a revolver liability

a company credit card that lets a company borrow money but has to be repaid quickly

what is accounts payable/recievable

Accounts receivable is a recorded asset in “Revenue” of the income statement, but hasn’t been received by the company yet

Accounts payable is a recorded liability in “expenses” of the income statement, but has not yet been paid out in cash (usually payments to legal services)

What are the equity line items in the balance sheet

Common Stock, Treasury Stock, Retained earnings, and other accumulated comprehensive income

What does the Cash Flow Statement Track?

the cash flow statement tracks changes over a period of time

What is the First step in linking the 3 statements together

Net Income from the bottom of the Income Statement becomes the top line of the Cash Flow Statement.

What is the Second step in linking the 3 statements together

you add back non-cash expenses from

the Income Statement (and flip the signs of

items such as Gains and Losses).

What is the Third step in linking the 3 statements together

you reflect changes in operational Balance Sheet line items – if an

Asset goes up, cash flow goes down and vice versa; if a Liability goes up,

cash flow goes up and vice versa.

What is the Fourth step in linking the 3 statements together

you reflect Purchases and Sales of Investments and PP&E in Cash

Flow from Investing.

What is the Fifth step in linking the 3 statements together

you reflect Dividends, Debt issued or repurchased, and Shares

issued or repurchased in Cash Flow from Financing.

What is the Sixth step in linking the 3 statements together

you calculate the net change in cash at the bottom of the Cash Flow Statement, and then link this into cash at the top of the next period’s Balance Sheet.

What is the Seventh step in linking the 3 statements together

you update the Balance Sheet to reflect changes in Cash, Debt,

Equity, Investments, PP&E, and anything else that came from the Cash

Flow Statement.

Why Investment Banking?

My interest in banking came directly out of my experience at Welsh Carson last summer. I really enjoyed the investment evaluation process, but what I kept noticing was that the most interesting moments happened around the transaction itself: how deals get structured, how management teams present and respond under pressure, how a deal can hinge on something that has nothing to do with the model. I realized I wanted to understand that process from the inside before going back to the investing side. Banking gives you a high volume of reps across different industries and deal types, and I think that's the fastest way to build real transactional judgment. Long term, I want to stay in private markets — but I want to go back as someone who's actually executed, not just evaluated.

Why Solomon?

Yeah, so I like Solomon because Lean deal teams provide early responsibility and meaningful exposure, which is especially appealing for someone like me who’s pursuing a long-term career in investment banking. It’s also a strong opportunity to learn by working closely with experienced bankers who have deep expertise across specific sectors and subsectors, accelerating my professional development.

The firm’s rapid growth creates the potential to gain exposure to both new and established groups, offering a dynamic and evolving platform. Solomon also has a clear commitment to giving back through philanthropy initiatives, including programs that match employee donations, reflecting a values-driven organization. Which I admire deeply.